Investment Advisory and Discretionary Firms Increased by 101 in One Year, but Contract Assets Decreased

As of the end of March this year, the total number of investment advisory and discretionary management firms reached 680, an increase of 101 firms compared to the previous year, while the contract amount decreased by 2.6%.

According to the "2022 Business Year Investment Advisory and Discretionary Management Business Status" announced by the Financial Supervisory Service on the 6th, as of the end of March, the total number of investment advisory and discretionary management firms was 680, up 101 from 579 firms in the same period last year. The number of dual-operation investment advisory and discretionary management firms increased by 43 to 302, and the number of specialized investment advisory and discretionary management firms rose by 58 to 378.

As of the end of March, the contract amount stood at KRW 710.8 trillion, a decrease of KRW 18.5 trillion (2.6%) during the same period. Advisory contract amounts increased by KRW 4.8 trillion (15.4%) to KRW 35.9 trillion, while discretionary contract amounts decreased by KRW 23.3 trillion (3.3%) to KRW 674.9 trillion.

The contract amount of dual-operation investment advisory and discretionary management firms, including asset management companies, securities firms, and banks, totaled KRW 691.7 trillion, down KRW 20 trillion (2.8%) from the previous year. This breaks down to asset management companies with KRW 578.2 trillion (83.6%), securities firms with KRW 111.8 trillion (16.2%), and banks with KRW 1.6 trillion (0.3%). From April last year to March this year, the fees earned by dual-operation investment advisory and discretionary management firms totaled KRW 803.9 billion, a decrease of KRW 249.8 billion (23.7%) compared to KRW 1.0537 trillion in the same period last year.

Among dual-operation investment advisory and discretionary management firms, as of the end of March this year, asset management companies managed discretionary assets totaling KRW 603.6 trillion, and securities firms managed KRW 110.8 trillion. In the case of banks, the size of discretionary-type Individual Savings Accounts (ISA) managed assets was KRW 1.3 trillion, a decrease of KRW 13.3 billion (1.0%) compared to the previous year.

On the other hand, the total contract amount of specialized investment advisory and discretionary management firms was KRW 19.1 trillion, an increase of KRW 1.5 trillion (9.1%). From April last year to March this year, fee income totaled KRW 125.3 billion, a decrease of KRW 59 billion (32.0%). During the same period, proprietary asset management losses amounted to KRW 17.4 billion, a decrease of KRW 231.3 billion (108.1%) compared to the previous year. This is interpreted as a significant decline in proprietary asset management profits and losses, including securities and derivatives, due to the stock market downturn. Net loss for the period was KRW 60.3 billion, marking a deficit turnaround with a decrease of KRW 208.1 billion (140.8%) compared to the same period last year.

The discretionary asset management scale of specialized investment advisory and discretionary management firms totaled KRW 4.2 trillion, down KRW 6.64 billion (1.6%) from the previous year.

The Financial Supervisory Service evaluated that "Among dual-operation investment advisory and discretionary management firms, securities firms experienced a sharp decline in discretionary contract size due to losses in discretionary wrap accounts caused by the rapid rise in bond yields last year, but asset management companies continued their growth mainly by operating investment discretionary services targeting institutions." It added, "Despite the limited market size, the continuous influx of new specialized investment advisory and discretionary management firms due to low entry barriers has intensified competition and polarization."

This content was produced with the assistance of AI translation services.